Morgan Stanley upgraded Alibaba (BABA) stock, arguing the Chinese AI play has room to run higher after a 70% rally in 2025 so far as cloud demand really accelerates.
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The Wall Street bank upgraded Alibaba to Overweight from Equal Weight, essentially raising from Hold to Buy, with a price target of $180, up from $100. Analyst Gary Yu said he had underestimated the surge in the company’s artificial intelligence-driven cloud demand, as well as the strength of its core Taobao and Tmall Group business.
BABA Cloud Growth Sparks Rethink
The upgrade comes after the company topped Wall Street estimates for revenue growth in the last quarter, in what was viewed as its first real test of sentiment after a surge in the stock price. Revenues in the Fiscal third quarter rose 8% to $38.38 billion, thanks in large part to strength in the cloud arm from rising AI demand.
Cloud revenues rose 13% year-on-year to 31.7 billion yuan, or about $4.3 billion, primarily driven by double-digit public cloud revenue growth, including the growing adoption of AI-related products. “Notably, AI-related product revenue maintained triple-digit year-over-year growth for the sixth consecutive quarter,” BABA said.
Based on this strong growth, Morgan Stanley forecasts Alibaba’s cloud revenue will double in three years, and values AliCloud business alone at $100 per share under a “high-end scenario.” Chinese internet companies offer “superior exposure to AI enablers / adopters,” Yu told investors in a research note.
Revenues from Taobao and Tmall Group, the company’s core e-commerce division, remained surprisingly resilient, rising 9% year-over-year to over 100 billion yuan, about $13.8 billion.
Meanwhile, Joyce Ju of Bank of America Securities also raised Alibaba’s price target to $150 from $117 while maintaining a Buy rating, saying cloud intelligence revenue should expand by over 30% year-over-year in FY26.
Is Alibaba Stock a Good Buy Right Now?
On Wall Street, analysts have a Strong Buy consensus rating on BABA stock based on 12 Buys and one Hold assigned in the past three months. The average BABA stock price target is $157.52, implying an upside potential of about 10%.
